DRB-Hicom set for £100m gain on Lotus divestment

KUALA LUMPUR, May 24 — DRB-Hicom Bhd will raise a total of £100 million (RM556.8 million) through the divestment of Lotus Advance Technologies Sdn Bhd by Proton Holdings Bhd.

China-based Zhejiang Geely Holding Group Co. Ltd (Geely) will acquire a 51 per cent stake in British automaker, Lotus, for £51 million while the remaining 49 per cent is being purchased by Etika Automotive Sdn Bhd, which is owned by Tan Sri Syed Mokhtar Al-Bukhary, the tycoon who holds the controlling stake in Proton’s parent company, DRB-Hicom.

Acquisition of a stake in Lotus from Proton was part of Geely’s deal in becoming a strategic partner for the national carmaker.

DRB-Hicom and Geely today signed a binding heads of agreement in Putrajaya, paving the way for the Chinese car group to acquire a 49.9 per cent equity in Proton. Subject to regulatory and shareholder approvals, Geely and DRB-Hicom are expected to sign the ‘definitive agreement’ in July 2017, where the value and more details of the deal are expected to be disclosed. HSBC Bank is Geely’s financial advisor in the transaction while QuantePhi Sdn Bhd is the financial advisor for DRB-Hicom.

Second Finance Minister, Datuk Seri Johari Abdul Ghani who witnessed the signing said following the strategic partnership, Proton was expected to emerge as a formidable automotive player in Malaysia, Asean and the global market.

DRB-Hicom Group Managing Director, Datuk Seri Syed Faisal Albar, meanwhile, said the Proton brand would remain present and would grow significantly with the new foreign strategic partner on board. “DRB-Hicom’s controlling 50.1 per cent stake means Proton will remain a Malaysian national brand,” he was quoted as saying.

Geely’s Group Executive Vice President/Chief Financial Officer, Daniel Donghui Li said the group had full confidence in Proton and would fully respect the brand’s history and culture. “We will restore Proton to its former glory with the support of Geely’s innovative technology and management resources,” said Li.

Geely, which already owns Swedish carmaker Volvo Cars Corp and The London Taxi Company, was reportedly said to be expanding its reach into the Southeast Asian region through Proton. The entrance of Geely as a foreign strategic partner will revitalise Proton which incurred huge losses in the financial year ended March 31, 2016.

Lotus, meanwhile, made a loss of £27.6 million in the 12 months ended March 31, 2016. Lotus comprises an engineering division that sells sports car technology to other businesses and also specialises in composite materials and light weighting technology, which Geely might look to deploy across its vehicles to help them meet stringent emissions targets in China.

Proton, which was founded in 1983 by the Malaysian government to create a domestic auto brand, bought Lotus in 1996. — Bernama